KKR has secured $2.5bn for its second Asia-focused private credit fund, underscoring growing investor appetite for higher-yielding strategies in a region still dominated by bank lending, according to sources cited by Bloomberg.

The Asia Credit Opportunities Fund II reached a final close late last year and includes $700m from separately managed accounts, according to people familiar with the matter. The vehicle is a performing credit fund targeting low-to-mid-teens returns.

The fund follows KKR’s inaugural Asia Pacific credit vehicle, which raised $1.1bn in 2022, with more than half of the capital sourced locally. KKR has since expanded its regional credit platform, hiring specialist teams and completing transactions in markets including Japan, Australia, and India.

Asia’s private credit market remains relatively small compared with the global private debt industry, but is forecast to grow to $92bn by 2027 from $59bn in 2024, driven by investor demand for yield and diversification.

However, competition remains intense. Borrowers in the region often favour traditional bank loans, which can be 200 to 400 basis points cheaper than private debt and offer additional services such as cash management and revolving credit facilities.

As of September, KKR managed $315bn of credit assets globally, including liquid strategies, and continues to position private credit as a long-term growth pillar across its platform.

If you think we missed any important news, please do not hesitate to contact us at [email protected].

Can`t stop reading? Read more.